Markell proposes small reduction in 2009 tax increase but no sunsets

Thursday

Jan 24, 2013 at 4:46 PMJan 25, 2013 at 1:11 PM

Gov. Jack Markell and his top financial advisors unveiled the $3.712 billion 2014 fiscal year budget that would increase spending by 3.49 percent over 2013 during a press conference held Thursday in the Tatnall Building in Dover.

By Antonio Pradoantonio.prado@doverpost.com@DoverPostPrado

Gov. Jack Markell proposed a small reduction in the personal income tax increase of 2009 for the 2014 fiscal year budget as opposed to allowing that increase and others to expire under the sunset provisions placed in the legislation from a couple of years ago.

Delaware's personal income tax was increased from 5.95 percent to 6.95 percent in 2009, Markell said. But, effective January 2012, that increase was reduced to 6.75 percent, he said.

Markell proposed another reduction of the tax to 6.6 percent, which would take effect in January 2014.

He said that would keep Delaware very competitive compared to other states in the region.

Markell's budget proposal answered some of the questions that were raised last week in the Delaware General Assembly when he said he would not push for tax cuts the state could not afford.

Markell and his top financial advisors unveiled the $3.712 billion 2014 fiscal year budget that would increase spending by 3.49 percent over 2013 during a press conference held Thursday in the Tatnall Building in Dover.

Delaware Office of Management & Budget Director Ann Visalli said the state faced a $56 million shortfall in this budget proposal for 2014, which begins July 1, 2013. So, the state cut $28.7 million amongst its agencies, leaving a hole still of $27.3 million.

That was among the reasons why Markell's tax proposal for 2014 was essential, Delaware Secretary of Finance Tom Cook said. In essence, it was important to avoid tax sunsets because the nonpartisan DEFAC had predicted that state revenues would fall from $3.727 billion in fiscal year 2013 to $3.663 billion in fiscal year 2014.

"The tax proposals are aimed at stabilizing our revenue situation this fiscal year while being mindful of the need to consider challenges we face beyond the upcoming fiscal year," Cook said.

Looking ahead to 2015, Visalli said the state could face a $266.4 million deficit if nothing were done.

It was also important to look ahead to the $155 million shortfall projected for the 2015 fiscal year.

Markell's 2014 budget proposal included $6.9 million in new spending to expand behavioral health service counselors tenfold within schools to 30; create prevention programs for at risk youth, provide care for youths aging out of foster care, fund the Delaware National Guard Youth Challenge and to hire six new Delaware State Police troopers.

He said the new initiatives represented 0.194 percent of the budget's growth.

Markell delegated the duty of finding ways to help schools to Lt. Gov. Matt Denn, who recommended expanding in-school behavior health services at a cost of $3.3 million because that was the top service requested at wellness centers amongst the state's high schools.

"The lieutenant governor and I visit a lot of schools," Markell said. "They're seeing more and more kids with mental health issues and they're getting younger. I am told that the No. 1 request at the high school's wellness services is for mental health services. We have three behavioral health professionals on the front lines. That's not getting the job done."

As for $2.2 million worth of prevention programs for youth, Markell said he visited a crime scene in the city of Wilmington, where a 10-year-old boy told him he had nothing to do.

"Unfortunately, he was right," Markell said. "In a more perfect world, it wouldn't be up to state government to fix that but we don't live in a perfect world."

Markell said he realized some in the General Assembly would oppose some of his budget proposals. But he said Delaware had a good system in place to vet the budget, namely the budget hearings to be conducted for the next six weeks.

The 2014 budget listed no general salary increases, but Markell and Visalli acknowledged that pay increases would be forthcoming due to agreements in place with union workers, including Delaware teachers, who receive increase in pay based on experience and levels of education completed.

Markell's budget also did not include any proposed funding to revise such teachers' pay structure as noted in his State of the State in order to cut down on attrition amongst young teachers and teachers in some of the state's toughest, high poverty schools. But, Markell said he wanted to at least start the conversation this legislative session with the possibility that his proposal be included in the 2015 fiscal year budget.